Feds cuff VW exec over diesel emissions scam

Oliver Schmidt accused of coordinating cover-up

The FBI has arrested a senior Volkswagen executive for allegedly coordinating a cover-up over its diesel emissions cheating.

Oliver Schmidt was nabbed in Florida over the weekend. He is expected to appear in court in Detroit on Monday on charges of defrauding the United States.

A court filing [PDF] lodged by the Feds in the eastern district of Michigan claims Schmidt not only knew about the illegal "defeat devices" installed in some VW cars to cheat emissions tests, but tried to persuade executive management to stay quiet about them while the company was being investigated by California air quality officials.

Schmidt was VW's general manager of its engineering and environmental office in Michigan when the investigation started in 2014. In that position, he repeatedly claimed that strange readings from its diesel cars were due to a variety of technical issues.

In fact, as we now know, engineers had purposely added a device that detected when exhaust fumes were being tested (in essence, when the car was being run but wasn't moving) and reduced emissions in response.

It wasn't until September 2015 that VW officially acknowledged its defeat device, but the FBI claims it has evidence that Schmidt informed the executive management about the devices in a presentation in July, and argued that it should keep quiet about them.

"In the presentation, VW employees assured VW executive management that US regulators were not aware of the defeat device," argues the FBI indictment, dated December 30. "Rather than advocate for disclosure of the defeat device to US regulators, VW executive management authorized its continued concealment."

VW at first blamed a group of "rogue engineers" for the cheating, and one of them – James Liang – pled guilty in September. Many suspected the cheating went higher up, however.

Schmidt has also been named in lawsuits by several US states, accusing him of playing a key role in deliberately concealing VW's illegal activity from regulators. He also appeared in front of UK parliamentary committee last year to argue that VW's actions weren't illegal in Europe.

His arrest comes as Volkswagen was reportedly nearing an agreement with the US authorities to pay between two and three billion dollars in fines for its behavior. ®